The Consequences of World War I

One hundred years ago today, the fighting in World War I ended in an armistice agreement. An old order disappeared and our modern era began. The work of our Caux Round Table for Moral Capitalism (CRT) has evolved to challenge the darker sides of our modern temperament by providing ideals and standards for constructive globalism and just social orders.

Thanks to World War I, an imperial age evaporated. Russian, Ottoman, German and Hapsburg empires collapsed. The British Empire, though triumphant on the battlefields of Europe and the Middle East, was financially wounded and spiritually subverted. The 2,000 year Chinese empire in Beijing, in the process of collapse, would be replaced first by warlordism, then by civil war and then by an ideological, one-party dictatorship. The Japanese attempt to create a new empire in East Asia and the attempt by Hitler to build a similar empire in Europe would both fail. The United States emerged as a first among equals with a determining role to play in building a new international political and economic order.

The new norm for the global community became the self determination of peoples. Each “people” was thereafter entitled to a sovereign nation state, a legal order derived from the 1648 European Westphalian compromise between church and secular powers. To protect nation states, aggressive war was outlawed. This norm was incorporated into the League of Nations and today’s United Nations. To check the powers of such national sovereignties, international law on human rights was created and multilateral organizations were established.

But the definition of who a people entitled to its own state might be was left vague. Today, conflicts among “peoples” are a source of contention and violence. What is the proper status of the Scots, Catalans, Palestinians, North and South Koreans, Uighurs, Tibetans, Kurds and the Ukrainians? What is the proper balance of power between the peoples of the European Union and the Union’s central administration? Does China have sovereign territorial rights over the South China Sea or the Senkaku Islands? Are the Taiwanese a “people?”

The end of World War I ushered in modern culture with its angst and distempers of nihilism and narcissism. In Europe, history was abandoned as having led to failure of systems. Architecture abandoned classicism and turned to modernism with its clean horizontal and vertical lines and its ideal that form should follow function. Philosophy under Dewey and Wittgenstein embraced rational skepticism. Law turned more and more to legal positivism and instrumental response to contemporary values and policy needs. Music replaced symphonies with Jazz and syncopation. In literature, Joyce, Proust, Kafka and Hemingway set forth new modes of writing and chose new subjects for reflection. Innovation, embracing whatever was not old, became the common currency of culture. The marginalization of religion began. The spirit of the age became what Pope Francis calls “anthropocentrism” – humankind taking over from both God and nature.

Modernity was thus unsettling and still is. Reaction set in, perhaps most importantly under Hitler in Nazi Germany.

In economics, after World War I, socialism took on new power to displace capitalists as a ruling elite. Our economic order is still unsettled by the conflicting claims of capital and labor. Governments evolved a welfare state ideology to balance and compromise the respective interests of finance, production, workers and communities. The collapse of the Soviet Union and the shift to “socialism with Chinese characteristics” in China under Deng Xiaoping solidified a modern approach to economic growth and social justice which blends private goods and the common good on terms mediated by the state.

Thus, the CRT’s principles for business, ethical government and ownership of wealth address the central problem of our time.

Our need to move beyond the fears and power imbalances of today can be met by finding common cause in fundamentals so that the “upsettingness” of modernity becomes both constructive and comfortable for all.

Inscribed on his grave is Karl Marx’s Thesis Eleven on the philosopher Feuerbach: “The philosophers have only interpreted the world in various ways; the point, however, is to change it.“ And on David Livingston’s burial market in Westminster Cathedral are his last written words: “All I can add in my solitude, is, may Heaven’s rich blessing come down on everyone, American, English, or Turk, who will help to heal this open sore of the world.”

As I stood on the back of our Capital in Washington, D.C. on Friday, January 20th, 1961, I heard our new President John F. Kennedy urge: “Don’t ask what your country can do for you. Ask rather what you can do for your country.” Today, I would amend that to replace country with “world.”

One hundred years after the Great War – the War to end all wars, the War to make the world safe for democracy – ended, our task remains to act to ensure that modernity reflects the better angels of our nature.

Please Join Us: 10th Annual Celebration of John Brandl & His Uncommon Quest for Common Ground

And what about the poor?

Can there be a moral capitalism if people are poor?

Whose fault is it that people are poor – the system or theirs?

Superficially speaking, the left blames the system and wants redistribution of wealth from rich to poor while the right “blames” the poor for not doing more to get up and go after jobs, education, self-discipline.

But what if each side is narrowly focused in their analysis of causes of poverty and so also in its advocacy of what might really change circumstances for those in poverty?

What if each side understands some but not all of the truth about poverty?

Last year, the Caux Round Table for Moral Capitalism (CRT) and other organizations brought to Minnesota for our annual John Brandl Program to continue John’s “uncommon quest for common ground” Robert Doar of the American Enterprise Institute and Ron Haskins of the Brookings Institution to speak on blending ideas from the right and the left seeking to reduce poverty.

Inspired by common sense virtue supporting their collaboration, the Brandl Program organizers – the CRT, Center of the American Experiment, Citizens League, Growth & Justice and the Humphrey School – agreed last year on collaboration around the challenge of reducing poverty in Minnesota. We decided that our first step should be setting forth our separate ideas and concerns about how to do this. Each group wrote an essay on poverty and Dean Laura Bloomberg of the Humphrey School wrote an introduction. We will release these essays at this year’s Brandl Program.

This year’s program marks the 10th anniversary of our joint continuation of John Brandl’s uncommon quest for common ground. We are proud to mark this milestone for a country so divided in its politics and its cultures with a major collaborative effort seeking the common good for our state.

To mark the release of our essays, Robert and Ron are returning to Minnesota for the 2018 Brandl Program scheduled for 4:30 pm on Monday, November 26th at the Humphrey School in Cowles Auditorium and you are invited to join us.

The keynote speaker for the program will be Tonya Allen, President & CEO of the Skillman Foundation in Detroit. The Skillman Foundation works to ensure that Detroit youth have access to high-quality educational and economic opportunities and a strong, broad network of champions that work on behalf of young people’s interests.

The event is free and open to the public.

For additional information or to register, please click here.

Please Join Us, AEI and Brookings for a Discussion about Poverty in Minnesota on the 26th

In June of last year, we cosponsored an event with Robert Doar of the American Enterprise Institute and Ron Haskins of the Brookings Institution to discuss their joint AEI/Brookings Working Group on Poverty and Opportunity report titled “Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring the American Dream”. 

This report is most notable for its success in bringing together a common goal – reducing poverty – advocates from different policy perspectives.  Reading the report is like turning the clock back to when America worked reasonably well for the common good.

We are very excited to announce that Ron and Robert will return to Minnesota on Monday, November 26th to discuss what has happened since their initial visit and where they see things going forward.

We will also be releasing our own local, joint report on recommended steps to reduce poverty in Minnesota.  These recommendations will come from the Caux Round Table for Moral Capitalism, Center of the American Experiment, Growth & Justice and the Citizens League.  Ron and Robert will respond to the range of our suggestions.

Please join us for a very special round table discussion with Robert and Ron at 7:30 am on the 26th at the Minneapolis Club. 

Registration and a light breakfast will begin at 7:00 am and the event at 7:30 am. 

Cost to attend is $15 for Business and Public Policy Round Table members and $35 for non-members.  Payment will be accepted at the door.

Copies of the report will be available at the event.

To register, please contact Jed at jed@cauxroundtable.net or (651) 223-2863 (email preferred).

The Minneapolis Club is located at 729 2nd Ave South in downtown Minneapolis. 

Parking will be available in the Minneapolis Club’s parking ramp.

The event will conclude at 9:30 am.

New CRT E-Book Now Available on Kindle!

To help the Caux Round Table for Moral Capitalism advocate its Principles for Business, publications are a basic tool for the dissemination of our ideas and practical ways to implement them.

We have been fortunate to have published Moral Capitalism (2004) and The Road to Moral Capitalism (2014). We have now published our monthly newsletter Pegasus for 7 1/2 years.

This week, we are delighted to announce a new publishing format: e-book and print-on-demand on Amazon.

We find that there are many important and thoughtful contributions to new ways of thinking about capitalism which fit neither academic publishers or peer-reviewed journals, nor commercial houses. Thus, we want to fill a void with our own use of new technology of digital and print-on-demand and bring to public consideration worthy ideas and recommendations.

We have just posted on Amazon for downloading on Kindle an e-book: Ethics – Collected Works.

You may purchase the book here.

If you purchase the book and enjoy it, I would be very grateful if you left a review on Amazon. Reviews really do help give the book better visibility for those searching on Amazon for books on these subjects.

I am grateful for the assistance of my colleagues Erik Sande and Patrick Rhone in making the essays included in this book available to the global public.

Please forward this email to those whom you think might want to consider reading these essays on moral capitalism.

We have two additional collections of essays we will be publishing in the coming months.

In addition, we now want to reach out and provide publication for commentaries, essays and manuscripts which fall between the stools of academic presses and journals and commercial houses. Please get in touch with me if you have thoughts and comments you would like us to consider for publication under our brand.

Special Round Table with American Enterprise Institute and Brookings Institution on Reducing Poverty in Minnesota

In June of last year, we cosponsored an event with Robert Doar of the American Enterprise Institute and Ron Haskins of the Brookings Institution to discuss their joint AEI/Brookings Working Group on Poverty and Opportunity report titled “Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring the American Dream”. 

This report is most notable for its success in bringing together a common goal – reducing poverty – advocates from different policy perspectives.  Reading the report is like turning the clock back to when America worked reasonably well for the common good.

We are very excited to announce that Ron and Robert will return to Minnesota on Monday, November 26th to discuss what has happened since their initial visit and where they see things going forward.

We will also be releasing our own local, joint report on recommended steps to reduce poverty in Minnesota.  These recommendations will come from the Caux Round Table for Moral Capitalism, Center of the American Experiment, Growth & Justice and the Citizens League.  Ron and Robert will respond to the range of our suggestions.

Please join us for a very special round table discussion with Robert and Ron at 7:30 am on the 26th at the Minneapolis Club. 

Registration and a light breakfast will begin at 7:00 am and the event at 7:30 am.

Cost to attend is $15 for Business and Public Policy Round Table members and $35 for non-members.  Payment will be accepted at the door.

Copies of the report will be available at the event.

To register, please contact Jed at jed@cauxroundtable.net or (651) 223-2863 (email preferred).

The Minneapolis Club is located at 729 2nd Ave South in downtown Minneapolis. 

Parking will be available in the Minneapolis Club’s parking ramp.

The event will conclude at 9:30 am.

The Fruits of Modern Capitalism

Swiss bank UBS just released its 2018 report on the world’s billionaires. A few factual highlights I thought would be of interest to you:

  • Globally, billionaire wealth increased by USD 1.4 trillion to USD 8.9 trillion in 2017, its greatest absolute growth ever, with China minting 2 billionaires a week.
  • Billionaires have driven almost 80% of the 40 main breakthrough innovations over the last 40 years. Approximately 70% are technology-related and 80% of the companies behind them are based in the Americas.
  • A new cohort of Chinese entrepreneurs is challenging Silicon Valley amid rising tensions over trade and intellectual property. With 50 unicorns produced in China and 62 in the U.S., the Chinese are proving restless innovators and disruptors.

Rent-Seeking Pays

A short comment on rent-seeking:

It may be that the most thoroughgoing distortion of free markets and capitalism is rent-seeking – consolidation of firms to give commodity pricing and market dominance to a few, benefiting from favorable government privileges and regulations (also obtaining market privileges through the prevention of regulation), cronyism of all sorts, agreements in restraint of trade,…

We should not, therefore, blame capitalism or those in finance and enterprise for the sins of rent-seeking, only those who engage in rent extraction.

I noticed recently in The Economist a claim that in the U.S., rent-seeking through special tax benefits is profitable. The money spent on lobbyists who arrange for the special tax advantages to be adopted by the Congress or through administrative interpretation of regulations earns a return for companies of 22,000%. Secondly, American financial firms which spent the most on lobbying benefited disproportionately from bank bailouts after the 2008 financial crisis.

Good Advice

I want to pass on a sound observation by Carlos Ghosn, CEO of Renault and Nissan:

“If you don’t find the solution, it’s because you didn’t see the real problem.”

I like his optimism and his call for intelligent observation and analysis of the “what is” – the Tao of the Chinese and the Dharma of the Buddhists and maybe the natural laws of how the world works of the West.

Do You Like Elizabeth Warren’s Accountable Capitalism Act? Hate It? Please Join Us Next Thursday

At 9:00 am on Thursday, October 25th, we will be hosting a round table to discuss Senator Elizabeth Warren’s proposed federal legislation “The Accountable Capitalism Act” for large corporations and you are invited to join us.

In short, she proposes to have a law that focuses such corporations on stakeholders more than only shareholders.  This idea is at the heart of the Caux Round Table’s Principles for Business.  It is also the objective of the new benefit corporation laws passed by over 30 states, including Minnesota.

Now, the proposal is destined to be controversial, not only for its objective which rejects the simplistic vision of Milton Friedman and financial fundamentalists who claim systemic advantages to having corporations focus on short-term profits to be shared mostly with shareholders.  But it will be controversial because Senator Warren will most likely seek the nomination of the Democrat Party for the Presidency in the 2020 election.

Is her idea a good one?  Is it too idealistic?  Does it contain hidden flaws?  Can it work?

Registration and a light breakfast will begin at 8:30 am and the event at 9:00 am.

Cost to attend is $15 for Business and Public Policy Round Table members and $35 for non-members.  Payment will be accepted at the door.

I will be facilitating.

To register, please contact Jed at jed@cauxroundtable.net or (651) 223-2863 (email preferred).

The University Club is located at 420 Summit Ave in St. Paul.

You may read a precis of her proposal in the September edition of Pegasus here.

Private Production of Public Goods?

A very common misperception about the nature of goods and services limits our intellectual horizons on the good that can come from free market capitalism.

I refer to sustainable development and the current global discussion as to how best to implement the 17 U.N. Sustainable Development Goals (SDGs). Most of the goals in their objectives contemplate provision of a public good or service or the reduction of a public “bad,” such as disease, pollution or discrimination.

What is overlooked is how to scale the production of such “public” goods to have a global impact.

When many of us hear the term “public,” we immediately default to a vision of something provided by the government and not by private markets. “Public” goods traditionally have been paid for by taxpayers and delivered by government.

But that does not have to be the case. Many so-called public goods, such as health and education, are also simultaneously private goods. Health is good for individuals, just as is more education.

Where the use and benefit of goods has a private, personal ownership character, why not use markets and business for production and delivery? After all, both health and education have long been provided by doctors and teachers offering services for a fee.

We might also do well to think of the capacity of private transactions to reach huge scale. Consider the internet and the digital economy. Private businesses like Google and Apple have provided more access to more people more quickly and more efficiently than governments could.

I have just read of several sectors where private business could make a dramatic impact on implementing the SDGs. One is the production of air conditioners. One billion air conditioners will be installed in the next 10 years. Heat waves kill people. It also reduces hours at work in many countries. Lack of refrigeration causes loss of food crops to rats and insects in many developing countries. If HFCs were phased out of the air conditioners made by companies and the energy use by all were as low as in the best of today’s models, millions of consumers buying such machines would make the world better. Replacing refrigerant would reduce greenhouse gas emission by 90 billion tons by 2050.

Large cities are complaining about road congestion and point a finger of blame at ride hailing vehicles. But what about road pricing? Using price to drive consumption levels of a private good – transportation?

In the mid-pacific, somewhere between 45,000 and 129,000 tons of plastic debris floats on the surface of an area roughly the size of Alaska. How to remove such non-biodegradable garbage? What about a private enterprise which would sweep the plastic up and sell it to recyclers?

This is being attempted by Boyan Slat. He designed a boom to float on the surface of the ocean and hold a mesh net under it. As the wind and waves sweep the boom over the water, plastic debris is collected by the mesh net. Occasionally, the net is retrieved and its haul of plastic picked up, taken to land and sold. An investment of 5 million Euros is needed to put into the collection business a similar boom of 1 kilometer or more in length.

Thirdly, in The Netherlands, two Dutch firms have created a road bed made from recycled plastic instead of bitumen. Sections of road are prefabricated in a factory and then installed as a road bed. These plastic road beds will last two-to-three times longer than conventional roads and cost less. They would eliminate the need to use bitumen made from hydrocarbons and provide a use for plastic which needs to be recycled.

These examples point us to a best practice: private enterprise generates new technology, works out the problems and deploys the product to whatever scale society wants to pay for.

Moral capitalism, anyone?